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Why do economic downturns caused by banking or financial institutions crises lead to longer and deeper...

Why do economic downturns caused by banking or financial institutions crises lead to longer and deeper recessions than those caused by other sectors of the economy, such as decline in manufacturing?

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ANSWER: Generally, The financial sector depends a lot on the expectations and the belief of the people on the system. The procedure of the credit creation occurs by the multiplier effect. For suppose if investors don't possess belief on the system, the credit creation process would be delayed and the economy will take much longer time to come back to normal state. It will take a long time for the people to build belief in the financial institutions again. On the other side, the downturn in the manufacturing sector happens mostly from the lack of demand, which is not permanent. This is not completely related to belief of people.

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